Will an agricultural land be treated as capital asset, in case it is located within 8 kilometers from the local limits of a City Municipal Corporation, even though the same is not notified by the Central Government under section 2(14)(iii)(b)? CIT v. Madhukumar N. (HUF) (2012) 208 Taxman 394 (Kar.) On this issue, the Karnataka High Court observed that, as per section 2(14), an agricultural land is not a capital asset except in the following cases - (a) when it is located within the jurisdiction of a municipality, etc, which has a population not less than 10,000 or (b) when it is located within 8 kilometers from the local limit of a municipality, etc, mentioned in (a) above, which is notified by the Central Government in this regard. For an agricultural land to become a capital asset by virtue of (b) above, two conditions have to be satisfied namely, the population of the municipality etc, should not be less than 10,000 and the same should be notified by the Central Government. Therefore, in case an agricultural land is situated within 8 kilometers from the local limit of a municipality, etc. whose population is more than 10,000 but the same is not notified by the Central Government, the said land would not be a capital asset and no capital gain tax would be attracted on its sale
Posted on: Tue, 29 Oct 2013 05:50:11 +0000
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